Company Town | THE BIZ

Not All Projections Bad for Overgrown Theater Chains

The exhibitors who got into trouble, suggests Syufy, are those who put all their efforts into building rather than operating and managing their existing theaters.

Syufy and Redstone concur that exhibition is fundamentally sound, and although it's a slow-growth business, it can be a cash cow.

"If you build the right number of theaters in the right locations for the right amount of money and operate them properly, you can make a lot of money," says Syufy.

Some exhibitors point a finger at Hollywood, blaming a lackluster box office and decreased attendance for their financial woes. Loews' Shugrue, a former studio executive himself, says Hollywood's strategy of releasing huge numbers of film prints to generate instant box-office results means more money for Hollywood and less for movie theaters.

But Syufy says that's a cop-out.

"Hollywood is not to blame. Over the last 15 years, the business has neither declined nor increased more than about 5%. If exhibitors cannot find a way to be profitable when the business is flat or down 5%, that is not Hollywood's problem. We need to look at our cost structures and balance sheet and have to protect our downside in a mature market."

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Too Many

Theaters

Moviegoing has failed to keep up with the frenzied building of movie theaters across the nation. To survive, exhibitors are forced to close older, unprofitable theaters and increasingly run for bankruptcy cover.

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Since 1980, U.S. movie ticket sales have increased only 43% ...

Ticket sales in billions

1980: 1.02 billion tickets sold

1999: 1.47 billion tickets sold

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. . . while the number of screens in the country has more than doubled.